Ping An 2318

[winston]

Fortis denies facing liquidity crisis

Fortis denied it was facing a liquidity crisis and pledged to speed up asset sales, as the Belgian-Dutch bank became the latest focus of investor concerns about the fragility of Europe's financial sector.

As its shares fell for the fifth straight day, the bank said it had a funding base of 300 billion euros (HK$3.41 trillion) and solid solvency ratios, and that it was in talks to raise 5 to 10 billion euros from the sale of a broader range of assets than previously intended.

Fortis also moved to reassure depositors that their money was safe, as it said withdrawals by account holders represented less than 3 percent of its total Benelux retail and private banking customers' assets.

REUTERS

[winston]

Ping An says has not paid for stake in Fortis JV

HONG KONG, Sept 29 (Reuters) - China's Ping An Insurance <2318.HK>, which this year struck a deal to buy half of the asset management arm of FortisFortis, a Belgian-Dutch financial firm, was nationalised on Sunday.

Ping An spokesman Shen Ruisheng told Reuters that Ping An <601318.SS> was studying its next move in the deal to pay 2.15 billion euros ($3.12 billion) for a 50 percent stake in Fortis Investments.

Shen also said Ping An had no plans for now to increase its stake in Fortis, and that it was unlikely to buy the other half of what was agreed to be a 50-50 global asset management joint venture with Fortis.

[winston]

Ping An says has not paid for stake in Fortis JV

SHANGHAI, Sept 29 (Reuters) - China's Ping An Insurance (2318.HK: Quote, Profile, Research, Stock Buzz), which this year struck a deal to buy half of the asset management arm of Fortis (FOR.BR: Quote, Profile, Research, Stock Buzz)(FOR.AS: Quote, Profile, Research, Stock Buzz), said on Monday that the deal had not yet secured Chinese government approval and that it had not yet paid for the stake.

Fortis, a Belgian-Dutch financial firm, was nationalised on Sunday.

Ping An spokesman Shen Ruisheng told Reuters that Ping An (601318.SS: Quote, Profile, Research, Stock Buzz) was studying its next move in the deal to pay 2.15 billion euros ($3.12 billion) for a 50 percent stake in Fortis Investments.

Shen also said Ping An had no plans for now to increase its stake in Fortis, and that it was unlikely to buy the other half of what was agreed to be a 50-50 global asset management joint venture with Fortis. (US$=0.6892 euros)

[lrsun]

Hi, Winston

Fortis will not sell the 50% of asset mgmt arm to Ping An, does it mean that there is no worry for Ping An and it is now a good time to have some Ping An?

Wish you could enlighten me

tks

[winston]

Hi Irsun,

Ping An already went up a lot today... maybe on short covering.

In addition, they are still sitting on a big paper loss on their initial investment in Fortis.

Take care,
Winston

P/S I'm not vested in Ping An.

[winston]

Ping An shares leap after Fortis unit stake talks shelved
Katherine Ng

Shares in Ping An Insurance (2318) rose 13.77 percent yesterday after talks for a 50 percent stake in Fortis Group's asset management business were broken off.

Investors welcomed the development amid the current financial turmoil as it removed some of the concerns that have hung over the Shenzhen-based insurer following its plan to make a huge share offering early this year.

Ping An shares rebounded yesterday afternoon to close at HK$50. Trading was active with HK$1.9 billion worth of shares changing hands, or about 3 percent of total market turnover.

"Ping An has been heavily penalized by the market for its investment in Fortis with shareholders absorbing all the impact of the mark-to-market losses at Fortis," said Merrill Lynch analyst Karen Chan.

Chan estimated that Ping An already may need to write down as much as HK$3.5 per share.

Goldman Sachs analyst Darwin Lam agreed: "The plan to drop the Fortis Investment acquisition is positive for the company as it avoids further strain on its solvency and capital after severe mark-to-market losses [on its investment in the Benelux bank]."

Merrill Lynch changed its recommendation on Ping An from `neutral' to `buy' despite lowering its target price to HK$60.22 from HK$64.69 in a move it attributed to the financial turmoil.

( Winston's Comment: So smart that they can predict Target Price to 2 digits )

Following discussions between Ping An and Fortis, an agreement to buy Fortis Asset Management was terminated because not all the conditions of the deal could be met under the current market situation, Ping An said yesterday.

[winston]

Not vested. From UOB-Kay Hian:-

Ping An Insurance

Cancels Eu2.15b asset management deal with Fortis

Ping An is scrapping the Eu2.15b asset-management deal with Fortis. While the cancellation removes the overhang on the stock, the performance of Fortis remains the major concern for investors.

Corporate Events
Ping An is scrapping the Eu2.15b purchase of half of Fortis’ asset management unit.

Stock Impact
The announcement will strongly Ping An’s share price in the short term. The cancellation signifies implies that Ping An’s capital will not face a significant drain to finance the joint venture. With the worsening credit crisis, Ping An is likely to have made provisions for the joint venture as soon as the investment is made. Ping An would also have to raise additional capital to finance the deal for it to maintain a stable level of solvency. Ping An is fortunate to be able to walk away from the deal unaffected, and in the current business environment, there are plenty of asset management businesses to choose
from and at much cheaper prices.

Earnings Risk
The share price performance of Fortis is Ping An’s largest risk in the near term.

Recommendation
We believe the cancellation of the deal is beneficial to Ping An in the current situation. However, the cancellation was not completely unexpected as there had already been talks saying that regulators would veto the deal to protect Ping An. While the cancellation of the deal will remove a potential overhang for investors, given that the worst-case scenario of Ping An going through with the deal would have meant another Eu2.15 or Rmb21.5b of provisions for Ping An.

However, the cancellation does not have a material impact on Ping An as it has not paid any money in the first place. While one overhang has been removed, the share price performance of Fortis still lingers as the largest near-term overhang for investors. Although the fall in Ping An’s share price over the past week was largely overdone, it did provide attractive entry points at below HK$40 per share. We maintain HOLD on Ping An with a fair price of HK$55.75 until there is a material improvement in the share price performance of Fortis.

[winston]

BROKER CALL - Hong Kong-listed Ping An upgraded to 'buy' - Merrill Lynch
03 Oct 2008
Xinhua Newsfeed

HONG KONG (XFN-ASIA) - Merrill Lynch upgraded Ping An Insurance (Group) Co Ltd's Hong Kong-listed H-shares to "buy" on valuation grounds.

It did not indicate what its previous recommendation had been.

Ping An's share price dropped sharply from last Friday when the market started to worry about the insurer's investment in European financial group Fortis, which has since been partly nationalized by Benelux governments.

Fortis's share price has fallen more than 70 pct since Ping An bought a 4.99 pct stake in the firm for 23.8 bln yuan on November 2007.

"We believe the concern on (its investment in) Fortis is overdone. Under the worst scenario, should Ping An write off the whole investment in Fortis, it would only cut its fair value by about 3.5 hkd per share," Merrill said.

Ping An's termination of an agreement to buy a 50 pct stake in Fortis Investment Management for 2.15 bln eur has removed concerns about that deal, it added.

However, Merrill Lynch cut its target price for Ping An to 60.22 hkd from 64.69, factoring in a potential impairment charge for its investment in Fortis and the weakness in mainland share markets.

Ping An holds a big portfolio of mainland equities

[winston]

Not vested.

Ping An says Fortis will hit 2008 profit
Benjamin Scent

Ping An Insurance (2318) said yesterday it will treat the 15.7 billion yuan (HK$17.8 billion) it lost on investments in Fortis as an impairment loss on its income statement, an accounting move the Chinese insurer said will have a "material impact" on its net profit for the first three quarters.

The money Ping An lost on its 23.87 billion yuan investment in the Belgian-Dutch financial group was previously accounted for as mark-to-market losses. Mark-to-market losses can later turn to mark-to-market gains if the value of an investment goes back up. The extent of the impairment charge's impact on Ping An's profit will be announced to investors once the preparation of the third-quarter results is basically completed, it said in a stock exchange announcement.

Ping An said the impairment charges on its Fortis investment will only affect the company's profit for 2008. The company still has sufficient capital and the impairment will not impact the company's net asset value or cash flow, it said. "The interests of our customers are adequately protected. The group will continue to deliver long-term sustainable returns to investors."

The company expects its solvency margin to remain above 300 percent. Ping An said its solvency margin currently stands at 348.5 percent. It said it will proceed with its plan to inject 20 billion yuan into its life insurance subsidiary.

[winston]

Citigroup cut the target price on Ping An to 62 hkd from 70 due to lowered 2008 earnings estimate to reflect impairment losses on Fortis.